Savings Flashcards
“Compounding frequency” refers to:
a. How often your interest is calculated and added back into your account
b. How easily you can add money into your account
c. What type of interest your account earns
d. What interest rate you can expect from your account
a
When would you need to use the Rule of 72?
A. To figure out the interest rate for your savings account
B. To find out how long it will take your money to double
C. To estimate how much money you’ll have in your account in 72 years
D. To calculate a reasonable monthly savings goal
b
savings account
most basic kind of savings vehicle; they give you less access to your money than checking accounts
money market account
deposit account that is part checking and part savings;
Can write checks with this account but there are restrictions;
Usually offer higher interest rates
Require a high minimum balance and initial deposit
certificate of deposit
deposit held for specific number of terms
penalized if withdraw money
budget
plan for your money: where it needs to go, how much, and when
Interest is:
A. charge for lending money to a bank
B. the amount owed for borrowing money
C. the amount added into your savings when opening a bank account
D. a charge for the convenience of accessing money stored in your bank account
b
The purpose of a budget is to:
Ahelp you plan how you will spend the money you earn or receive.
Bstop you from spending too much money.
Cincrease the balance of your savings account
Dtell you how much you owe the government in taxes
a
To earn as much interest as possible, you should open a savings account that earns \_\_\_\_\_\_\_ interest and has the \_\_\_\_\_\_ interest rate. Acompound; lowest Bcompound; highest Csimple; lowest Dsimple; highest
b
John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions would enable him to earn MORE interest?
ASelecting an account with a high interest rate.
BLeaving his money in the account for long period of time.
CTransferring money into his checking account each month.
DBoth A & B
d
You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money? ACompounding 1 time a year BCompounding 4 times a year CCompounding monthly DCompounding daily
d
Which of the following is a type of savings vehicle? ACertificate of Deposit BMoney Market Account CChecking Account DBoth A & B
d
Which of the following savings vehicles usually requires a high minimum balance? ASimple savings account BCertificate of Deposit (CD) CChecking account DAll of the above
b
Which of the following is generally true about savings vehicles?
ASavings vehicles are only useful for long-term investments.
BPeople should evaluate different forms of savings vehicles based on their needs.
CSavings vehicles are never insured.
DAll of the above
b
John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions would enable him to earn MORE interest?
ASelecting an account with a high interest rate.
BLeaving his money in the account for long period of time.
CTransferring money into his checking account each month.
DBoth A & B
d
